Special report 2 - Big, chaotic and out of control

Tony Travers argues that the capital may benefit from being governed only fitfully

London is not Paris. As the two European cities size up to each other to compete for the 2012 Olympic Games, the differences between them will most surely be laid bare. Visitors to the French capital will be able to marvel at the litter-free streets, the reliable Metro, the absence of the dispossessed mingling with city-centre tourists. The Eiffel Tower has been rewired: it can once again deliver an hourly spectacular of twinkling lights. A regional high-speed rail network has already been built - unlike the benighted Crossrail. Schools and hospitals are among the best in France. All in all, Paris works.

Small wonder that a recent Corporation of London study gave the top score in a quality-of-life survey to Paris, ahead of London and New York. Its achievement is all the more impressive given that it has a residential population density two and a half times that of inner London (almost five times that of London as a whole). By good management of high-quality public services, Paris offers its tightly packed population the means to coexist in comfort.

London has evolved a different model. Almost eight million people now crowd together in a city that clearly cannot manage itself effectively. That is not to say London is unsuccessful. People, many of them from overseas, are voting with their feet. London resembles an American city in the early years of the 20th century, with a net increase in its foreign-born population of perhaps 100,000 a year. It is, in many ways, an exemplar of tolerance: opinion polls show attitudes to race, immigration and asylum-seeking are significantly more benign in London than in other regions.

Yet the city's system of government does not seem well placed to manage what a New York mayor described (in his own city) as the "glorious mosaic" of its population. Since London emerged as one of the world's great metropolises, it has resis-ted efforts to rationalise and strengthen its government. The very complexity and fragmentation of its make-up have conspired to repel "strong government". Thus, decisions are now divided between the mayor, Ken Livingstone, 32 boroughs, the City of London and an array of central government departments and quangos. Decision-making is burdened with what economists call "transaction costs".

Yet some London boroughs are among the best councils in the country. Camden, Westminster, Kensington & Chelsea and the City of London have been adjudged "excellent" by the Audit Commission - despite the extraordinary pressures of running complex social services in the heart of Europe's biggest city.

The boroughs cannot provide city-wide services and infrastructure, however. That is why the government created the Greater London Authority in 2000. The mayor of London was explicitly intended to run public transport, economic development and city-wide planning. As Livingstone has disarmingly admitted, both the mayor's capacity to deliver services and his access to resources are severely limited. Whitehall departments ensured that they kept control over powers and purse strings. If Livingstone (or his Tory opponent Steve Norris) wants to build Crossrail, regenerate the Thames Gateway or host the Olympics, he must get permission from the Chancellor of the Exchequer or the Deputy PM or both.

Whitehall itself remains incapable of the "joined-up" behaviour it demands of others. It is also unsure of how far it wants to devolve power. A government that wants to discourage car use in congested cities is responsible for the Strategic Rail Authority, which has agreed to inflation-busting increases in commuter rail fares. The Treasury appears to want to build Crossrail, while the Transport Department doesn't (or vice versa). The Government Office for London has more staff today than before the mayor was created.

As a consequence of having three levels of not very strong government, London is governed only fitfully. Long-term planning is well-nigh impossible. Major new projects defeat virtually all efforts to implement them. Weak partnerships abound, but only rarely deliver.

Yet the capital grows and prospers. Population equivalent to Sheffield's has been added since the mid-1980s. Leeds's population will be further added by 2016. The world floods up the Thames and sets up home. Many of London's problems are associated with success rather than with the decline familiar to other British cities.

The contrast between London's economic success and its messy, weak administration begs a fascinating question. Is it just possible that the city's fragmented government contributes to its success? The relative weakness of politicians and planners ensures that really bad decisions are not made, while creativity and success can force their way through the cracks between governmental institutions.

Nobody would sensibly argue that a city should have dysfunctional government. At the very least, London needs resources to deliver the transport and other infrastructure that will allow it to continue to develop. The office of mayor needs to be strengthened. More generally, the government must allow regions access to tax bases and long-term financial resources.

London will never be the kind of well-managed, sanitised city found in some parts of the world. It is big, chaotic and slightly out of control. Paris will always have cleaner streets and a better transport system. But London's government needs to be just good enough to ensure the city can survive and prosper.

Tony Travers is director of the Greater London Group at the London School of Economics. His book The Politics of London: governing an ungovernable city will be published by Palgrave Macmillan in September